Condo prices climb higher than forecasters predicted

The median price of a condominium on Oahu tied for an all-time record last month, and is on pace to finish the year higher than forecasted by University of Hawaii economists, while single-family homes are on pace to see flat or slightly lower price appreciation than the year before.

Already, the year-to-date median price for a condo — $407,000 for the first nine months of the year according to the Honolulu Board of Realtors — is higher than the price for all of 2017 predicted by the University of Hawaii Economic Research Organization in its recent construction forecast, which was $405,600.

The year-to-date median price is 5.4 percent higher than it was at the same point a year ago, which was $386,000. The median price of a condo for all of 2016 was $390,000, which was an increase of 8.3 percent from all of 2015.

For single-family homes on Oahu, the median price from January through the end of September was $757,000, an increase of 3.4 percent from $732,000 at the same point last year, according the Honolulu Board of Realtors data.

For all of 2016, the median price of a single-family home was $735,000, and that was a 5 percent increase from 2015.

The rate of appreciation in Hawaii is actually slower than the national and regional figures.

According to the Federal Housing Finance Agency’s Housing Price Index report for July, the most recent data available, home prices in the U.S. — the report does not distinguish between single-family and condo — rose 6.3 percent from July 2016 to July of this year, although for the Pacific region, which includes Hawaii, Alaska, Washington, Oregon and California, the median price increase over the one-year period was 8.2 percent.

Despite the slowed price appreciation, homes are still selling at a brisk pace. Sales of single-family homes during the first nine months of the year totaled 2,860, a 5 percent increase from 2,723 sales during the same period in 2016, and more than the number of homes sold in all of 2008 and 2009, during the Great Recession, as well as in all of 2011. The number of days those homes are on the market has gone down by one day over the past year to an average of 16 days.

Condos are selling even faster than they were a year ago. The average number of days on market for the first three quarters of 2017 was also 16 days, but that was three fewer days than at the same point last year, when it was 19 days.

Sales of condos totaled 4,373 units through the end of September, which was 5.8 percent more than the 4,133 that sold during the first nine months of 2016. The number of condos sold so far this year is also more than during each year from 2008 through 2012.

“Really, it’s affordability,” said Sue Ann Lee, a Realtor with Forward Realty and president of the Honolulu Board of Realtors. “When you think about there being so little inventory on the single-family side, what do you have left?”

But while condos may be affordable now for some buyers priced out of single-family homes, prices for those condos are forecast to rise at perhaps a faster clip over the next few years.

According to the UHERO forecast, the median condo price is expected to increase by 6.7 percent to $432,700 in 2018, 5.3 percent to $455,500 in 2019, and 3.5 percent to $471,500 in 2020.

For single-family homes, the forecast for the median price is $757,200 at the end of this year followed by an increase of 4.5 percent to $791,200 in 2018 and an increase of 3.8 percent to $829,900 in 2019.